While investment banking remains an extremely attractive career for young talent worldwide, it is essential to ascertain the two different sections of the front office of an Investment Bank. When entering a new role, one primary distinction is between advisory and investing roles. This difference can have a multitude of implications on your work-life balance, salary, type of work, and potential exit opportunities.
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We already mentioned the difference between the buy and sell side of a deal on the advisory side, so let’s take a step back and explore advisory.
Advisory
Advisory is otherwise known as the 'investment banking division within an investment bank. The main objective is to provide the necessary financial service to the client as efficiently and effectively as possible. Advisory typically includes Mergers and Acquisitions, Restructuring and Equity/Debt Capital Markets.
What does this mean for you?
Considering the client aspect of the role, employees on this side of an investment bank typically work slightly more hours as maintaining a good relationship with the client and sticking to deadlines is crucial for revenue generation. This is because investment banks are paid a fee for their advice. Therefore, the revenue generated from the division is independent of the client's performance. This means that an analyst's (and all team members) salary bonus is a function of the volume of deals instead of being tied to financial markets, making it more predictable.
Regarding the type of work, you should expect a lot of external meetings with the client since, whether on the buy or sell side, it is the client making the final decision. Additionally, you can expect be spending time on Excel, performing valuation and financial analysis, and on PowerPoint, building and refining decks. Exit opportunities are typically to the buy side (private equity) however other exits are possible such as moving in-house to a corporate development/strategy role.
Investing
Investing roles are part of the section of an investment bank that directly invests capital in various sectors to provide a financial return. Depending on the size of the investment bank, you could be investing either the firm’s money or creating a pool of capital from your different clients to invest. The different types of investing include Sales & Trading, Asset Management, and Private Wealth Management.
What does this mean for you?
Since you are making direct investments instead of giving advice, employees typically come into the office earlier and leave earlier as their job ties with public markets. Overall, investing employees work slightly fewer hours since there is no great urgency to deliver presentations and stick to as many deadlines as in advisory. However, even though the work-life balance is somewhat better, the compensation is less predictable and highly dependent on the performance of the investments (especially at a senior level).
Regarding the type of work, you should expect a lot of internal strategy meetings to discuss investment opportunities and market movements. In an investing role, you can expect to be doing more equity research and some financial modelling to determine the current value of an asset and whether it is overvalued/undervalued. Exit opportunities are similar to advisory roles and many analysts/associates choose to leave to join hedge funds or other investment companies.
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